Grocery deflation eases again in March

Retail food prices remained deflationary in March, but improved sequentially for the second straight month, data released Friday from the U.S. Bureau of Labor Statistics showed.

On a year-over-year basis, prices in the CPI’s food-at-home index, a proxy for grocery store prices, fell by 0.9%. March marked the ninth straight month of lower overall retail food prices. However, prices were up 0.5% from February, the largest sequential improvement for the index since May of 2014. In February, the index was up 0.3% from December.

The indexes for meats, poultry, fish, and eggs; for fruits and vegetables; and for cereals and bakery products declined over the past 12 months, the Bureau said, while the other three major grocery store food group indexes (non-alcoholic beverages, dairy and other) increased slightly over the span.

Fresh fruits and vegetables saw prices rebound in March and post its largest sequential percent gain (1.6%) in six years despite declines in retail prices for tomatoes, potatoes and oranges, the data showed. Within the meat index (+0.7% from February), prices were down in March for beef and veal, uncooked steaks, pork chops, fresh seafood and eggs. The dairy category was down 0.6% in March reflecting lower prices for milk, cheese and ice cream.

The index for food away from home, a proxy for restaurant prices, rose 0.2% in March, the same increase as in February, and is up by 2.44% over the last 12 months.

Earlier this week the Bureau said its producer price index, which tracks grocery input costs, turned positive again in March, led by a strong rebound in produce. Analysts say retail prices typically lag producer-level changes by a period of five or six months.